MVL, entrepreneur tax relief and dividends MVL, entrepreneur tax relief and dividends
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  1. #1

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    AnotherGuy's Avatar
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    Question MVL, entrepreneur tax relief and dividends

    Hello,

    I will be doing a MVL of a solvent LTD with considerable retained profit to distribute to just one director i.e. me.

    I've communicated this to my accountant and they've cancelled the monthly DD for their services and asks for £200+VAT for cessation procedures. Still they will be doing the SA for this tax year 20/21 as part of their services.

    They can recommend a liquidator from a couple they've been working with, or I can choose mine.
    May I ask for any recommendations from people here with good experiences?

    So far my accountant didn't mention anything about the entrepreneur tax relief. Would this be left to the liquidator?

    As coincidentally we've just started a new tax year, would it be wise to extract dividends now I'm still the director, and still trading? 30th of April will be my last trading day!

    I believe they are not gonna start a payroll just for one month, but other than that, is there anything I can do to optimise my tax affairs and prepare the situation for the liquidation?

    Thank you!

  2. #2

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    Chris Maslin (MVL online). You will claim ER as a personal tax relief on your SATR, so nothing to do with the liquidator.

  3. #3

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    May be difficult to distribute across two tax years now, but that would get you the annual tax free allowance for each distribution.

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    AnotherGuy's Avatar
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    Quote Originally Posted by jamesbrown View Post
    May be difficult to distribute across two tax years now, but that would get you the annual tax free allowance for each distribution.
    My accountant mentioned something about this, quote:

    "Capital gain distributions could potentially be distributed over the two tax years by liquidators so that you benefit of the capital gains allowance twice, one in 2019/20 and one in 2020/21. However, you should double check with the liquidator first and have their confirmation of whether this is possible."

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    Another +1 for Chris and MVLOnline.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

  6. #6

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    Quote Originally Posted by AnotherGuy View Post
    My accountant mentioned something about this, quote:

    "Capital gain distributions could potentially be distributed over the two tax years by liquidators so that you benefit of the capital gains allowance twice, one in 2019/20 and one in 2020/21. However, you should double check with the liquidator first and have their confirmation of whether this is possible."

    Capital Gains Tax (CGT) is due on a disposal of qualifying business assets - i.e the liability will arise in the tax year when the qualifying business assets are disposed of. It is not possible to dispose of the same business assets twice and span over the disposal over two tax years to claim the annual exempt amount twice..

    The liquidator will ordinarily not give advice on the capital gain tax due and neither will advise on the eligibility to claim the ER. The shareholder/s going through the MVL should obtain tax advice from a chartered tax advisor or an experienced chartered/certified accountant.

    The ER is a 'relief' so it will be up to the shareholder/s claiming the relief to ensure that the qualifying conditions are met. A tax advisor or an accountant cannot possibly confirm with a degree of certainty if the conditions are met but can provide advice on the qualifying conditions. The ER is to cover business assets, the debate remains if in a PSC/owner-managed business excess cash in the company will be considered kept for trading purposes or in the hope that there will be an eventual exit and a 10% tax rate will be available. If cash is not required in the business and the amount is substantial, the company may not qualify as a trading company. This point remains ambiguous and therefore left to the shareholder/office holder to determine if they do qualify to claim the ER for the build-up cash in their company.

  7. #7

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    Quote Originally Posted by AnotherGuy View Post
    Hello,

    I will be doing a MVL of a solvent LTD with considerable retained profit to distribute to just one director i.e. me.

    I've communicated this to my accountant and they've cancelled the monthly DD for their services and asks for £200+VAT for cessation procedures. Still they will be doing the SA for this tax year 20/21 as part of their services.

    They can recommend a liquidator from a couple they've been working with, or I can choose mine.
    May I ask for any recommendations from people here with good experiences?

    So far my accountant didn't mention anything about the entrepreneur tax relief. Would this be left to the liquidator?

    As coincidentally we've just started a new tax year, would it be wise to extract dividends now I'm still the director, and still trading? 30th of April will be my last trading day!

    I believe they are not gonna start a payroll just for one month, but other than that, is there anything I can do to optimise my tax affairs and prepare the situation for the liquidation?

    Thank you!
    I can recommend for MVLs contacting Meeta Bhatti from SFP Group, they do specialise in MVLs for contractors: Our Team - SFP Corporate Solutions

  8. #8

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    That Chart Accountancy account is very keen.
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  9. #9

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    Quote Originally Posted by wattaj View Post
    That Chart Accountancy account is very keen.
    Thanks, I have just noticed my comment has been posted multiple times for some reason, I have now deleted the duplicate posts.
    Last edited by Chart Accountancy; 19th April 2020 at 09:05.

  10. #10

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    Quote Originally Posted by Chart Accountancy View Post
    Thanks, I have just noticed my comment has been posted multiple times for some reason, I have now deleted the duplicate posts.
    It's a feature of the system

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